THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, November 9, 1995 TAG: 9511090365
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY TOM HOLDEN AND ALETA PAYNE, STAFF WRITERS
DATELINE: VIRGINIA BEACH LENGTH: Long : 143 lines
Commonwealth's Attorney Robert J. Humphreys on Wednesday asked the Circuit Court to empanel a special grand jury to investigate the school district's deepening financial problems.
Reacting to an agitated city government that is hungry to untangle the $12.1 million school deficit posted in 1994-95, Humphreys asked Circuit Judge Jerome B. Friedman for the special jury, the first such request in Virginia Beach in a decade.
The court did not give an immediate answer, and Humphreys said it may take up to a week for Friedman to decide. If the court grants the petition, then the Circuit Court will decide the panel's size and who will serve on it. The court probably would appoint Humphreys as the jury's legal adviser.
If empaneled, the special grand jury would have the power to subpoena school district records, as well as acting and former school district personnel. But it would not be able to extend its legal reach into Georgia, where former Superintendent Sidney L. Faucette, who has become a focal point in the fiscal crisis, now works. Instead, the jury could only request that Faucette return on his own to Virginia Beach to answer questions.
``There are a lot of obstacles to anyone being prosecuted for this,'' Humphreys said. ``I don't know if anyone ever will be. What I am saying is that it's not the most important issue here.
``The number one (issue) is: What the hell happened? The public needs to know. They don't know it right now. They know a little more now that Peat Marwick got into the picture, but they don't know what I think they ought to know.
``Number two: Who is responsible? As much as can be known should be known about who made what decisions that brought this to pass.
``And then what can we do in the way of accountability?''
If a special grand jury is empaneled, it would have great latitude to decide what to investigate, how broad the investigation should be and who should appear before it to answer questions.
``They're the masters of their destiny,'' Humphreys said. ``We'll go where they want to go. My suggestion to them is that we use the Peat Marwick audit as a starting point.''
Special grand juries do not issue indictments. They can recommend to a regular grand jury, which meets on the first Monday of every month, that an indictment is called for, Humphreys said.
After that, the regular grand jury can decide whether sufficient evidence exists to issue an indictment and bring the case to trial. Or, the special grand jury can issue a report and suggest legislative remedies.
``Everyone is publicly saying, `We want to get to the bottom of this,' and I am prepared to give them that opportunity,'' Humphreys said.
The decision to move the case into the courts comes after the City Council and the School Board received an audit from KPMG Peat Marwick that uncovered a $12.1 million deficit for the fiscal year that ended June 30. That figure is about $4.8 million more than the district reported in August.
The report portrayed a school district that wrongly predicted how much money it would receive from state and federal sources, then spent more money than was allowed in its budget. It is a violation of state law for the district to end the year with a deficit.
The audit also uncovered $43 million in budgetary transfers made during the fiscal year that rendered much of the original budget document useless.
This year, the school system already faces an additional $6.6 million deficit, but it has begun taking actions to deal with the problem. On Tuesday night it met until 1 a.m. and approved more than 100 pages of budget transfers totaling more than $5.5 million to prevent ending the 1995-96 fiscal year with a deficit.
Reaction to a potential grand jury was mixed. Some called it politically motivated and unnecessary; others doubted whether a jury could do more than the city and the School Board working together.
Mordecai L. Smith, the district's chief financial officer who was placed on administrative leave in September, praised Humphreys' action.
``This is a godsend because this will provide an opportunity for the public to hear the true facts,'' Smith said. ``Just as the audit revealed there were many players in the process, the grand jury will bring not just full disclosure, but exposure. This is a blessing.
``I'm very happy, very excited.''
School Board member Tim Jackson, who on Tuesday called upon Faucette to return to Virginia to answer questions about the deficit, was hopeful but expressed some disappointment.
``I was hoping we could resolve it without this taking place,'' Jackson said. ``However, we have absolutely no control over what our commonwealth's attorney chooses to do, and we have to simply trust the system.''
Interim Superintendent James L. Pughsley declined comment, as did Vice Chairman D. Linn Felt.
Board member Joseph D. Taylor said, ``I think it's real disappointing to hear that. . . . I think that's totally unnecessary in my opinion. I'm surprised he decided to do that.''
Board member Donald F. Bennis, who was appointed last spring to fill Charles W. Vincent's seat, said, ``My first comment when I heard it would be something you can't print.''
While conceding that Humphreys is acting within the authority of his office, Bennis considers the move ``unfortunate.''
City Councilwoman Louisa M. Strayhorn, a former School Board member, questioned the need for a special grand jury, saying there was no guarantee that its findings would be made public.
``I think the answers ought to be found, but there are other vehicles,'' she said. ``Will this make the issue any plainer to the people? . . .
``Everyone said we would wait until the audit came out and then we would do certain things,'' Strayhorn said. ``Now we have it, but have we given everyone enough time? Dr. Pughsley has been doing everything he can to get to the bottom of this. The audit just came out.''
But others took a more welcoming attitude to Humphreys' efforts.
``If I'm asked to come in, I'll be happy to share any and all information I have,'' said former board member and chairman James R. Darden, who resigned in January. ``But what I have is no more than any other board members possess.''
John T. Early, chairman of the advocacy group Kids First and a frequent critic of the School Board, was delighted.
``We're looking forward to having the major actors come in and testify under oath.''
Asked if he thought Faucette would return willingly, Early said: ``I would expect him to come up because he's made public statements already . . . . that he wants to tell his side of the story. We expect him to cooperate.''
Faucette could not be reached Wednesday.
In September, Faucette said he would be willing to return to Virginia Beach to help sort out the budget mess.
``I, as much as anyone, want to know what occurred,'' he said. MEMO: HOW IT WORKS
A special grand jury is empaneled by a group of Circuit Court judges
to investigate possible wrongdoing. The jury consists of seven to 15
members, who decide the scope of their investigation. The commonwealth's
attorney serves as legal adviser to the group. A special grand jury
can:
Subpoena witnesses and documents within the state of Virginia.
Take testimony under oath.
Recommend indictments to a regular grand jury.
The panel's investigation is closed to the public, but it must file a
report reflecting its findings and recommendations. That report does
not have to be made public, although it can be.
Source: Commonwealth's Attorney Robert J. Humphreys
ILLUSTRATION: Former superintendent Sidney L. Faucette will be asked to return
to answer the panel's questions.
KEYWORDS: BUDGET INVESTIGATION VIRGINIA BEACH SCHOOLS VIRGINIA BEACH
SCHOOL BOARD by CNB